Countdown to Agency (and Party Like it’s $9.99!)

Kobo Reads

March 29, 2010

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From next week onward, April Fool’s Day will also be known as Agency Day or “The Day We Turned the eBook Market Upside Down and Shook It Until It Rattled”. Not that this will necessarily be a bad thing, but there will definitely be some changes. We’ve been blasting through new contract paper for agency publishers at a fairly frantic pace*. When the dust settles, it’s going to be a different world, whether you’re an ebook reader, industry watcher, publisher, or retailer. So to get you ready, here are some of the things you’ll notice starting April 1.

We’re Going to Party Like it’s $9.99
Or less! It’s the Last Days of Discount. We’ll have some great last minute promotions before they go away. How’s this: $2 off every ebook you buy between now and midnight on March 31st! Use this code: 2party and share it around!

Some Prices Will Go Up
No two ways about it. Bestseller prices are going to rise from many major publishers and we can expect more to follow. In the US, a lot of $9.99’s are going to become $12.99’s and some will be more. Not much we can do about it — we aren’t allowed to discount them. It’s pretty much a case of take the publisher’s price or lose the books.

Some Prices Will Stay the Same or Go Down
Not all publishers are doing agency (for now). So you’ll still see some books that are discounted (including from some major publishers). And we’ll be doing our best to be competitive everywhere we can.

Comparison Shopping Goes Away (Sort of)
Hunting for the best price is going to be a thing of the past, at least for titles from “The Agency 5″. The price will be the same everywhere that those books are sold. The new fight will be on shopping experience, reading experience, device coverage, and how much freedom the user has with the books they’ve been given. (That’s something we’re feeling pretty good about.)

Promotions, Discounts and Most Loyalty Programs Go Away
With agency, the price is the price. We lose most of our ability to issue coupons, promotions, special discounts, kickbacks, buy-X-get-one-free. We could still do it for non-agency titles, but then we end up in a weird situation of “Get $1 off, but only on these books, and definitely not on these other ones.” That’s not fun. And worse, it’s confusing to consumers. We’re sad about that, obviously. Not just because they’re a great way for us to drive sales, but because they help us focus attention on specific great books, reward our loyal customers, and celebrate the launch of new features, apps or services.

Marketing Wars
With price competition going away, expect to see a lot of focus in the ebook space on brand building. When prices are the same, the fight becomes on attracting customers on each service’s merits. Expect to see TV ads with people reading on devices under trees, on beaches, while bouncing joyously on trampolines, on bearskin rugs.

Random Acts
There is definitely going to be some weirdness in the coming weeks and months. Retailers are going to be trying to figure out what they can and can’t do, and occasionally making some missteps along the way. Publishers are going to be holding the pricing levers for the first time, so we can expect a bit of lurching there.

Some Delistings
As we’ve already seen, some retailers and wholesalers may not make the transition to agency in time. Publishers may not be able to close all deals by the beginning of April. Retailers may find themselves presented with terms they can’t agree to. There are a lot of system changes that have to be made on just a few days/weeks notice. We may see some books disappearing (temporarily, we hope) from some ebook retailers come April 1st.

One thing is for certain — this is the first time a media industry has raised the price on an existing format across all retail channels simultaneously. One way or another, business students and marketing junkies will be studying this for years to come. We’re going to be watching closely, working with publishers, sharing data, and generally trying to make this transition as smooth as possible.

* To give some sense of pacing, the first time we negotiated with some of these publishers it took us 4-6 months to close agreements. We will have renegotiated every agency publisher we’re working with in 20 business days. Extreme!